Medicare Part B Penalty: Avoid a 10% Lifetime Surcharge in Retirement

The short answer: The Medicare Part B penalty adds 10% to your monthly premium for each full 12-month period you were eligible but did not enroll. It generally lasts for life. Federal employees with FEHB tied to current employment usually qualify for a Special Enrollment Period that can help them delay Part B without this penalty.

What is the Medicare Part B penalty?

The Medicare Part B penalty is a surcharge added to your monthly premium when you sign up late. According to Medicare.gov, you may pay an extra 10% for each full 12-month period you could have signed up but did not. For most people, this penalty is not a one-time fee. It is usually charged for as long as they have Part B, which often means a lifetime.

For federal employees approaching retirement, this matters. The rules interact with FEHB coverage in ways that many people find surprising. The good news is that there are recognized situations where the penalty may not apply at all.

• The penalty equals 10% per missed year. Medicare.gov explains that it adds 10% to your premium for each full 12-month period you delayed (Medicare.gov, Avoid late enrollment penalties).
• It usually lasts as long as you have Part B. Medicare describes these penalties as ongoing additions to your premium, not a one-time charge. For most people that means a lifetime surcharge.
• The 2026 standard Part B premium is $202.90 per month. The Centers for Medicare & Medicaid Services confirmed this figure in its November 2025 fact sheet (CMS.gov).
• Current-employment coverage usually opens a Special Enrollment Period. The Social Security Administration notes that an active employer group health plan can typically let you enroll in Part B without a penalty through an SEP (SSA.gov).
• FEHB for active federal employees is generally treated as current-employment coverage. This is why many working federal employees can often delay Part B without triggering the penalty.

How does the Medicare Part B penalty actually get calculated?

The penalty is 10% of the standard premium for every full 12-month stretch you went without Part B when eligible. Medicare.gov lays out the math directly. The amount compounds the longer you wait.

Here is a worked example drawn from the figures Medicare publishes. Imagine someone waited two full years (24 months) to sign up for Part B. Say they also did not qualify for a Special Enrollment Period. That is two full 12-month periods, so the penalty would be 20%.

A worked penalty example using 2026 figures

Using the 2026 standard premium of $202.90, the calculation Medicare provides looks like this:

• Standard 2026 Part B premium: $202.90
• 20% late enrollment penalty (10% × 2 full years): $40.58
• New monthly premium: $243.48, which Medicare rounds to about $243.50

That higher amount would then generally continue for as long as the person has Part B. Over many years of retirement, a surcharge like this can add up considerably. That is one reason the Medicare Part B penalty draws so much attention among federal employees planning ahead.

How can federal retirees with FEHB avoid the Medicare Part B penalty?

Many federal employees are able to avoid the penalty because their FEHB coverage is tied to current employment. That usually opens a Special Enrollment Period. The SSA explains that an active employer group health plan can generally let you enroll in Part B without a penalty. This applies while that coverage is in place, or within a set window after it ends.

According to the Social Security Administration, an active employer group health plan can let you enroll in Part B without the late enrollment penalty. The SEP typically gives you an eight-month window. It begins the month after your current employment or the group coverage ends, whichever comes first.

Why FEHB is treated differently than retiree coverage

One distinction often causes confusion. It is the difference between coverage based on current employment and coverage you keep after you retire. The SEP rules generally hinge on current employment. FEHB you carry as an active federal employee usually counts as current-employment coverage. FEHB carried as a retiree is treated differently for Medicare timing purposes.

Because of this distinction, some federal employees find it worth confirming their enrollment timeline before they retire rather than after. The Medicare Part B penalty is generally avoidable when the SEP applies. But the SEP is tied to the period of active employment, so timing tends to be the deciding factor.

When does the Special Enrollment Period window open and close?

The Special Enrollment Period for Part B generally runs for eight months. The SSA notes it begins the month after your current employment ends. It can also begin the month after your group health coverage based on current employment ends, whichever happens first.

That eight-month window is one of the most important details for federal employees to understand. Once it closes, a person who did not enroll may have to wait for the next General Enrollment Period. They could then face the Medicare Part B penalty. You can review the specifics on the SSA’s Sign up for Part B only page.

Are you weighing how FEHB and Medicare fit together in retirement? Our guide on FEHB retirement healthcare costs walks through the broader picture. Our overview of FEHB and Medicare Advantage for federal retirees covers how the programs can interact once you are eligible.

Frequently asked questions about the Medicare Part B penalty

Does FEHB count as creditable coverage for delaying Part B?

For active federal employees, FEHB is generally treated as current-employment group coverage. That usually allows you to delay Part B through a Special Enrollment Period without a penalty. The SSA describes this current-employment rule on its Part B sign-up pages. Retiree FEHB is treated differently, so the timing details are worth confirming for your own situation.

How much is the Medicare Part B penalty?

The penalty adds 10% to your standard premium for each full 12-month period you were eligible but did not enroll. Take the 2026 standard premium of $202.90 as an example. A two-year delay would add 20%, or about $40.58. That brings the monthly premium to roughly $243.50, per Medicare.gov.

Does the Medicare Part B penalty ever go away?

For most people, no. Medicare.gov describes the Part B penalty as an ongoing addition to your monthly premium rather than a one-time fee. That generally means it continues for as long as you have Part B.

What is the Special Enrollment Period for Part B?

It is a window that generally lasts eight months. It begins the month after your current employment or your current-employment group coverage ends, whichever comes first. The SSA notes that enrolling during this period typically avoids the late enrollment penalty.

Do I have to take Part B as soon as I turn 65 if I am still working?

Not necessarily. Medicare and the SSA note that people with group health coverage based on current employment may be able to wait without a penalty. Many working federal employees with active FEHB fall into this category, though individual circumstances vary.

What happens if I miss my Special Enrollment Period?

If the SEP window closes and you did not enroll, you may need to wait for the next General Enrollment Period. The Medicare Part B penalty could then apply. This is why understanding your timeline before retirement tends to matter.

Sorting out Medicare and FEHB timing can feel complicated. The rules around the Medicare Part B penalty are exactly the kind of thing that is easier to understand with a clear explanation. Fed Pilot is a woman-owned small business offering free federal retirement benefits education workshops. They are built for federal employees approaching retirement. If you would like to explore how these pieces fit together for your own situation, register for a free workshop and bring your questions.